New York State
Ethics Commission


Advisory Opinion No. 97-6: Restrictions on the Consumer Protection Board's acceptance of donations from private sector sources for certain of its activities.

INTRODUCTION

The following advisory opinion is issued in response to an inquiry from the General Counsel of the Consumer Protection Board ("CPB"), Joseph Conway, concerning the CPB's possible acceptance of donations from private sector sources to underwrite certain of its activities in connection with Consumer Week.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by Executive Law §94(15), the Commission hereby renders its opinion that the CPB may accept such donations, but the source, timing and amount of each donation must be carefully considered in light of the role of the CPB as a protector of consumer interests. Given its statutory authority, it may not accept donations from entities subject to proceedings conducted by the Public Service Commission ("PSC"). Furthermore, it may not accept a gift which is conditioned in any way by the donor, or a gift where the donor's logo or other identifiable marking will primarily serve as a means of advertising.

BACKGROUND

Conway, in his request to the Commission, advised that the CPB is planning to host a luncheon gathering as one of the events for this year's Consumer Week, which is scheduled for October, 1997. The luncheon would be underwritten, either in whole or in part, by entities from the private sector. In addition, the CPB would like private sector entities to underwrite (1) the cost of several consumer publications to be distributed at the luncheon and, generally, during Consumer Week; and (2) the distribution of free handout packages, such as disposable plastic tote bags, key chains, toothbrushes and consumer literature.

The CPB is an independent agency of the Executive Department which is authorized, inter alia, to represent the interests of consumers before Federal, State and local administrative agencies and to intervene in proceedings before the PSC. In a previous opinion concerning an employee of the CPB, the Commission noted that the agency has two distinct funding sources, and that its activities are segregated according to the particular source. (Advisory Opinion No. 95-7.) The CPB's Utility Intervention Unit is funded from special revenues derived from assessments levied upon the gas, electric, steam, water, and telephone companies regulated by the PSC. Accordingly, its Utility Intervenor Attorneys are primarily engaged in appearing before the PSC and Federal regulatory agencies in proceedings involving utilities. All other agency activity is funded from General Fund revenues.

The CPB has asked for the Commission's opinion with regard to several issues arising from its proposed attempt to seek private sector funds. One of its specific questions is whether its statutory authority under Executive Law § 553(2)(c) to initiate, intervene in and participate in any proceeding before the PSC presents any special considerations. For example, it asks whether the acceptance of underwriting assistance from entities regulated by the PSC would create a conflict of interest or the appearance of a conflict.

APPLICABLE STATUTES

Executive Law §553(2) provides that the Executive Director of the CPB shall have the power and duty to, inter alia:

  1. advise and make recommendations to the governor on matters affecting the consumers of the state and promote and encourage the protection of the legitimate interests of consumers within the state; and

  2. on behalf of the board, initiate, intervene in, or participate in any proceedings before the public service commission . . . .

In addition, when directed by the Board, the CPB's Executive Director is empowered to, inter alia:

  1. conduct investigations, research, studies and analyses of matters affecting the interests of consumers;

    . . .

  2. represent the interests of consumers of the state before federal, state and local administrative and regulatory agencies;

    . . .

  3. undertake activities to encourage business and industry to maintain high standards of honesty, fair business practices, and public responsibility in the production, promotion and sale of consumer goods and service (Executive Law §553[3]).

Public Officers Law §73(5) provides as follows:

No statewide elected official, state officer or employee, member of the legislature or legislative employee shall, directly or indirectly, solicit, accept or receive any gift having a value of seventy-five dollars or more whether in the form of money, service, loan, travel, entertainment, hospitality, thing or promise, or in any other form, under circumstances in which it could reasonably be inferred that the gift was intended to influence him, or could reasonably be expected to influence him, in the performance of his official duties or was intended as a reward for any official action on his part. No person shall, directly or indirectly, offer or make any such gift to a statewide elected official, or any state officer or employee, member of the legislature or legislative employee under such circumstances.

This section prohibits an individual State officer or employee from directly or indirectly soliciting, accepting or receiving any gift worth $75 or more under circumstances in which it could be inferred that the gift was intended to influence him or her, or could reasonably be expected to influence him or her, in the performance of official duties, or was intended to reward official action.

Portions of the State's Code of Ethics, contained in Public Officers Law §74, are applicable to gifts to State officers and employees in certain circumstances. The provision that sets forth the rule with respect to conflicts of interest is found in subdivision (2), which reads as follows:

No officer or employee of a state agency . . . should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest.

DISCUSSION

Both Public Officers Law §§73 and 74 are applicable to gifts made to individual State employees. In Advisory Opinion No. 94-16, the Commission discussed in detail how these sections are to be interpreted and applied; it stated that the opinion was inapplicable to gifts to State agencies. The Commission has, however, using these statutes as guidelines, issued several opinions in which it considered the question of whether and under what circumstances an agency may accept a donation of money or goods, which is the question presented here.

In Advisory Opinion No. 92-1, the Commission considered gifts to an agency where the agency head was authorized by statute to accept gifts. There, the Commission held that the Commissioner of Agriculture and Markets could accept private contributions from regulated persons and entities, but not when they were involved in litigation with or under investigation by the agency. The Commission stressed the importance of maintaining the agency's impartiality in adversarial situations. It also cautioned that care be taken when the agency accepted a gift from a donor whose relationship to the agency might raise the appearance of impropriety, i.e., from a donor doing business with the agency, or a lobbyist, or an applicant for a license or permit. In such a case, the Commissioner would have to carefully consider the source, timing and amount of the donation. The Commission also urged the Commissioner to take care in acknowledging contributions, so that neither he nor the agency could be perceived by the public as favoring donors or pressuring others to give.

In Advisory Opinion No. 95-38, the Commission considered several other issues raised by the receipt of gifts by a State agency. Following its previous opinion, the Commission held that the Department of Environmental Conservation ("DEC") -- which, like the Department of Agriculture and Markets, is authorized by its governing statute to accept gifts -- could not accept contributions and donations from entities which are under investigation by or in litigation with the agency. It further held that DEC could accept donations from entities which are subject to its jurisdiction, have contracts with the agency, lobby or attempt to influence agency action, or have applied for funds from the agency. However, the source, timing and value of any gift could not be such as to cause the public to perceive the gift as an attempt to improperly influence the agency in the administration of its public duties.

The Commission went on to hold in that opinion that DEC may not accept gifts where the equipment or money donated is conditioned upon its use in a particular geographic region, saying that "[t]he Commissioner must be free to determine the allocation of the agency's resources statewide based upon his or her best judgment". Further, it held that while donors may freely advertise their donations to DEC, the use of logos or other identifiable markings on the donated equipment, while not prohibited, should be discreet:

Because circumstances may differ from case to case, the Commission does not hold that display of a logo is always impermissible. Nevertheless, identification of the donor through the use of a logo or other identifiable marking should be limited to situations where it is used to acknowledge the donation; it should not serve primarily as a means of advertising.

As an example, the Commission noted that a snowmobile, boat or automobile may have a logo included as part of the product. It distinguished such a logo from a special insignia or decal which makes the gift appear to be an advertisement, and which should not be added.

In another opinion, Advisory Opinion No. 96-2, the Commission held that the Tax Appeals Tribunal/Division of Tax Appeals was not prohibited from accepting the donation of computer equipment from a publishing company which publishes the Tribunal's decisions. It said that the Tribunal must weigh whether the donation was intended to influence, may actually influence or might appear to influence official action on the part of the agency. Due consideration must be given to the circumstances surrounding the donation, including whether it could be perceived as an attempt by the donor to curry favor with the agency. Clearly, the gift could not be accepted if it were offered at a time at which the publishing company had a matter pending before the Division or Tribunal, or was in litigation with either. In finding that the gift was acceptable, the Commission found it important that the publishing company had never had a matter before the agency. The Commission held that the Tribunal should make available the documents generated by the donated computer to all publishing companies.

Turning to the matter presented to the Commission by the CPB, the first question is whether the agency has the authority to accept gifts. In the three Advisory Opinions discussed above, two of the agencies, Agriculture and Markets and DEC, had specific authority granted by statute. The Tribunal did not have similar specific statutory authority, but, arguably, its enabling legislation could be deemed to provide such authority. In its opinion, the Commission stated that it would assume the Tribunal could accept gifts consistent with the Public Officers Law, and it suggested that the Tribunal contact the Office of the Attorney General if it wished a determination with regard to its underlying authority.

In the case of the CPB, its enabling legislation does not contain a specific grant of authority to accept gifts, nor is there general language demonstrating that such a grant was intended. Nevertheless, the Commission will proceed with its opinion based on the assumption that the CPB is able to accept gifts, but it suggests that the agency contact the Office of the Attorney General for a determination of its fundamental authority.

The Commission now turns to the question of whether ethical considerations would permit the CPB to accept private sector underwriting for its Consumer Week luncheon, as well as for its publications and handout packages. The Commission is guided by the principles set forth in Advisory Opinion No. 92-1, where it held that donations could not be accepted from individuals and entities involved in litigation with the agency or under investigation by the agency. The Commission noted in that opinion that in such adversarial situations, the agency's impartiality is especially important. The Commission urged that care be taken when accepting gifts from donors whose relationship might create the appearance of impropriety, such as lobbyists and those doing business with the agency. In those situations, the source, timing and amount of a donation should be carefully considered.

In Advisory Opinion Nos. 95-38 and 96-2, the Commission held that gifts to an agency should not be conditioned in any manner, and that the identification of the donor through the use of a logo or other identifiable marking should be limited to serving as an acknowledgment of the donation rather than as a means of advertising.

In applying these precedents to the CPB's inquiry, it is clear that the CPB may not accept donations from entities involved in litigation with the agency or under investigation by the agency. In addition, taking into consideration the CPB's unique role as representative of the interests of consumers and its power and duty to intervene in PSC proceedings, the Commission holds that the CPB may not accept donations from entities subject to proceedings conducted by the PSC. The special functions of the agency and its natural adversarial relationship with these entities preclude its acceptance of a gift without creating at least the appearance of a conflict of interest.

With regard to the CPB's receiving gifts from other entities, the Commission's precedents do not preclude their acceptance, even when the donor lobbies the agency or has business with the agency. Rather, the propriety of each gift must be examined on a case-by-case basis, and the source, timing and amount should be carefully considered.

The Commission notes that, in evaluating whether a potential gift would be acceptable, the CPB should recognize that the considerations underlying its analysis will be somewhat different from those discussed in Advisory Opinion No. 92-1. In that opinion, the Commission relied upon the statutory dual role of the Commissioner of Agriculture and Markets, who is both a regulator and a promoter of the agricultural industry in New York State. In contrast, the CPB's role is primarily that of a protector of consumer interests. It may, at any time, receive a complaint about almost any business operating within New York. This does not bar it from accepting gifts without the appearance of a conflict, but it should keep in mind its powers. If any particular potential gift is questionable, the agency is welcome to consult with the Commission.

In addition, under the Commission's precedents, it is clear that the CPB may not accept a gift which is conditioned in any way by the donor. For example, a donor could not offer to pay for a luncheon table and specify who is to be seated at its table. The agency must retain the discretion to arrange the affair as it sees fit.

Finally, while a donor which provides funding for the luncheon, the publications or the free handout bags may include a logo or other identifiable marking, its use must serve only as an acknowledgment of the donation. The logo or other marking may not serve primarily as a means of advertising.(1)

CONCLUSION

The Commission concludes that, assuming the CPB has authority to accept gifts, it may accept donations from private sector entities to underwrite its Consumer Week luncheon, publications and handout packages, but it must consider the source, timing and amount of each such donation in light of its role of a protector of consumer interests. Given its statutory authority, it may not accept any donations from entities subject to proceedings conducted by the PSC. Furthermore, it may not accept a donation which is conditioned in any way by the donor. Finally, the use of a donor's logo or other identifiable marking must be limited to serving as an acknowledgment of the donation rather than as a means of advertising.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the requesting individual who acted in good faith, unless material facts were omitted or misstated by the persons in the request for opinion.

All Concur:

Evans V. Brewster
Angelo A. Costanza
Robert E. Eggenschiller
Donald A. Odell, Members

Dated: March 17, 1997


Endnote

1. The Commission noted in Advisory Opinion No. 95-38 that, while a donor may make use of the fact of its donation in its advertising, the agency might have to return the gift if any advertisements stated or implied that the donor now has a special or positive relationship with the agency as a result.



URL: http://www.nysl.nysed.gov/edocs/ethics/97-06.htm